The AMA No Longer Matters

One of the discussion lists I participate in had a lively exchange about the AMA’s new Executive Vice President, Dr. James Madara. Some people thought he was a good choice, others thought he is too much a creature of academic medicine and too much of an Obama liberal. I really have no idea, I said, but over the past few years the AMA has betrayed America’s patients and I have no use for the organization. Then I added another post:

Folks,

I really have no business commenting on the AMA, so I won’t (any further.)  I love — quite literally — every poster on this list. You are all great physicians, dedicated citizens, and decent people in every way that counts. I do not want to discourage any of you in doing what you see as the right and moral thing.

I want to throw in a different thought that really has little bearing on what the AMA does. I hope you will indulge me, because I think it may provide context.

I no longer think this health care system — or this economy, or this government — is capable of being reformed. It is too late. I have asked every economist I know about how we get out of the mess we have created, including schools that don’t teach, growing numbers of people dependent on government handouts, a regulatory system that destroys entrepreneurship, and the impossible debt we have accumulated.

Not one has offered anything approaching an answer. Not just a practical answer, but even any theoretical, dreamland answer. There is no way out. That means the entire house of cards will collapse. Maybe not for another 20 years, maybe just 10. By collapse I mean something close to an early Mel Gibson movie in which survival is the primary motive.

A very large portion of our population has no practical skills. They may have advanced degrees in comparative literature or they may be great systems consultants and six sigma experts. But they don’t have a clue how to feed themselves, make clothes, build shelters, or fix a broken bone. After the collapse, the people who will prosper are those who can actually do something of value.

Feel free to dismiss all this as irrelevant to anything currently on the table. And perhaps I have become a kook in my old age. Certainly there have been nonsensical doomsday predictors forever, and maybe I have joined the crowd. But I have looked for any ray of sunshine and have not been able to find it. Sorry.

So my interest in health care now is to find a way that one patient and one doctor can find each other and work out a mutually beneficial relationship. Anything else is just noise.

Greg Scandlen

Very much to my surprise most of the people on the list agreed with me. I will publish a couple of the more extended comments in a moment. I would love to hear what you think.

 

 

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Mediscare and Medicare’s Real Future

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

Horsham, PA

Tel. 215-682-7075

Rfs270@aol.com

There has been much misinformation about what Congressman Paul Ryan’s plan does to try and save Medicare.  According to the Medicare Trustees Report the program is in deep financial trouble and is not sustainable for the long term.  Ryan has proposed that Americans under 55 today would receive premium support payments into private insurance plans approved by the government starting 10 years from now.  When the first 54 year old reaches Medicare age, those payments would actually be 50% higher than the current cost of Medicare for each beneficiary.  No current Medicare beneficiary and no one age 55 and older today would be affected.

I don’t know if his plan will work to save Medicare or not.  However, it is clear that if nothing is done the program will be in worse shape down the road.  I once heard a speaker use this simple formula for financial planning.  Problem multiplied by time equals a bigger problem.  Time is certainly against us.  It was in 1993 that President Bill Clinton held an “Entitlement Conference” designed to address the financial problems of Medicare, Medicaid and Social Security.  No action was taken after this conference. Now our Federal debt is over $14 trillion and the boomers are just starting to reach Medicare age this year.  The Tsunami is now coming ashore.

So what is the alternative proposal to Ryan’s idea?  I have heard nothing and read nothing from my Democratic leaders about what their proposal to save Medicare is.  If we continue to follow the same path we have been following and we all go over a cliff.  The result is higher Medicare premiums and higher deductibles and co pays with the imminent collapse of the program anyway.  It is disingenuous to criticize Ryan’s plan by saying seniors will have more out of pocket in the future under his proposal.  That is exactly what is occurring with the program now.

Look back 10 years and compare the out of pocket in the program to today.  In 2001, the Medicare Part B premium was $50 per month.  Today it is $115.40 per month or a 235% increase in government premiums and much greater than that for higher income beneficiaries starting at $80,000 of modified adjusted gross income.  The Part B annual deductible was flat at $100 until a few years ago.  Now it is $162.  The hospital deductible under Part A of Medicare was $792 in 2001.  Today it is $1,132 for each hospital stay/benefit period.  The Skilled Nursing co pay for days 21 through 100 was $99 in 2001.  Today it is $141.50.

Projecting the Medicare numbers out for 2021 using the last 10 years, seniors will face Part B premiums of $180 or much higher for many more people because there is no adjustment for the higher income surcharge.  In 2021 the Part B deductible would be $180 and each time a beneficiary stays in the hospital they would have to pay $1,472.  The skilled nursing co pay would be $184 for days 21 through 100.  Is this not taking money away from seniors?

Ten years ago, buying a Medicare Supplement was a choice that people made.  Today it is a necessity.  The irony is that you need to buy a private insurance plan to cover all of the out of pocket costs of the government plan which you already paid for your whole working life in income taxes and payroll taxes.  Still the government program is going broke.  Then any politician who tries to address the problem is crucified as demonstrated by the recent disgusting TV advertisement by the Agenda Project showing Paul Ryan pushing a grandmother off a cliff.

So what has the current administration done?  They got Obamacare passed which projects a $500 billion reduction in payments to health care providers within Medicare and diverts those funds to pay for expansion of Medicaid, government subsidies, regulations and enforcement under the so-called Affordable Care Act.  The weight of all of this will continue to stagnate the economy reducing revenue for payroll taxes that go to Medicare Part A which has constituently run deficits the last several years.  It is President Obama and his supporters in Congress that passed a law that drives a stake through the heart of Medicare at the very time the program is running out of gas.

We need to change course.  Paul Ryan and Clinton Advisor and former Congressional Budget Office Director Alice Rivlin came up with one idea to address the Medicare solvency problem.  The backlash against the proposal will diminish the chances of others coming forward with other solutions that may work to save Medicare.  Look out baby boomers; the politicians are interested in their own future, their re-elections, privileges and sanctimonious rantings.  They certainly don’t have our backs.

The Destruction of American Medicine

By Greg Scandlen

The New York Times has published a sobering article by Gardiner Harris  which describes how quickly we have allowed the best health care system in the world to slip through our fingers.

The story keys off Dr. Ronald Sroka, a family practice physician in Crofton, MD. It says,

Handsome, silver-haired and likable, Dr. Sroka is indeed a modern-day Marcus Welby, his idol. He holds ailing patients’ hands, pats their thickening bellies, and has a talent for diagnosing and explaining complex health problems. Many of his patients adore him.

But he is being pushed into extinction by academics like David J. Rothman, president of the Institute on Medicine as a Profession at Columbia University who is quoted:

Those of us who think about medical errors and cost have no nostalgia — in fact, we have outright disdain — for the single practitioner like Marcus Welby.

Mr. Rothman’s disdain and his allies in the insurance industry and government bureaucracies are winning the war. The article explains:

The share of solo practices among members of the American Academy of Family Physicians fell to 18 percent by 2008 from 44 percent in 1986. And census figures show that in 2007, just 28 percent of doctors described themselves as self-employed, compared with 58 percent in 1970.

It’s enough to make you weep, but there is perhaps a sliver of good news. A friend sent the following e-mail to one of my discussion lists:

Last week, Senator Whitehouse came to northern Rhode Island to speak to his home community. He had largely an elderly and retired audience of about 300. His comments were focused on them as he spoke of how he would fight to retain Social Security and Medicare. The audience clapped politely. Whitehouse continued to discuss healthcare. He eventually came to speak about physicians, lighting upon the topic as to how our actual charge per service differs depending upon what insurance each person has. “Go ahead,” he said, “call a doctor and ask what they charge for a certain visit or procedure. They’ll ask what insurance you have.”

I rose and said “$50.” I introduced myself to the audience and said that I charge $50 for an office visit, that I don’t take insurance, and that as a result of the massive cost savings by not having a coding specialist, collections specialist, or billing overhead, and by not having to rent an office big enough to house all those people, I can charge a reasonable fee while each patient retains the confidence of knowing that no third party will have any of their private medical information, of knowing that there are really only two people in the room when we talk, and of trusting that I’m going to provide the treatment that they really need rather than the treatment some third party tells me I should be providing.

I expected that this largely Medicare-covered audience would shake their heads and whisper “dinosaur” under their breath. Instead, I received applause and a few dozen new patients the next day. Each said roughly the same: “I’d rather pay for the care I want than have insurance cover me for care I don’t want.”

If indeed most new physicians choose to look toward the type of practices described in the Times article, that will allow all the physicians who want to run their own lives to do so without worrying about whether they’ll have enough patients. There will always be patients willing to pay a reasonable fee out of pocket for the kind of care that can be delivered by doctors like Dr. Sroka.

While the bulk of American medicine may accept becoming little bureaucrats, doing the bidding of their masters in Washington, a sliver will simply offer their services to patients on a cash or concierge basis. These few may grow until medicine becomes once again the noble profession it once was.

Krugman’s Blinders

By Greg Scandlen

There has been a lot written about Paul Krugman’s recent op-eds  and blog posts about how thinking of people as “consumers” rather than “patients” violates their “sacred” relationship with doctors.  My colleague Ben Domenech had one of the best rebuttals in Consumer Power Report #269.

It is more than a little disconcerting to hear people like Paul Krugman suddenly invoke the sacred doctor/patient relationship when they have been working so hard to have bureaucrats control both physicians and patients. But I want to make a different point, one that has been lacking in most of the commentary.

The whole point of Consumer Driven Health Care is to get people involved in their health care decisions long before they become patients.  For decades the “health policy community” has been fretting over this very thing – how to improve “health literacy,” how to get people to make healthy lifestyle choices, how to get people to ask questions about their treatment alternatives, how to teach people when it is appropriate to rush to the Emergency Department and when it is not, how to teach people the differences between the various medical specialties, etc., etc., etc.

We have health education classes in high school. We have newsletters with “Tips for Healthful Living.”  We have media reports about the latest breakthroughs in prevention and treatment.

None of it worked very well – until the advent of Consumer Driven Health Care. Suddenly people are responsible for making decisions about how to spend their own money for their own health, and they demand more information about their options. They sit together in the kitchen to decide how much money to set aside in a saving account and how big a deductible they can handle.  They have discussions about how often the kids go to the doctor and whether they will need glasses or dental work in the coming year. They look for lower cost generic drugs to replace the name brands they have been using. They use home remedies first, before making an appointment with the doctor. They participate in wellness programs.

They are not yet “patients.” They are active “consumers.”

If the Krugman’s of the world would take off their political blinders, they would see something wonderful is happening in the market.  But that would shatter their illusion of an all-powerful bureaucracy fixing everybody’s problems.

I Get a Kick Out of Uwe

By Greg Scandlen

Princeton professor Uwe Reinhardt is a really funny guy. Really. If you have ever caught one of his talks, he will leave you in stitches. Not the medical kind of stitches, but the other kind usually associated once-smoky nightclubs and a lone comic on the stage.

But he tops all of his previous comedic efforts in a single letter to USAToday. He begins by trying to rebut a recent op-ed:

One of the more mindless clichés trotted out in the health care debate is that “one size doesn’t fit all.” In seeking to rebut USA TODAY’s fine editorial on “RyanCare,” a proposal by Rep. Paul Ryan, Ed Haislmaier trots it out once again. He does this in a country whose entrepreneurs discovered a century ago that there are huge economies of scale in the idea that one size does indeed fit all to meet common human needs.

But, then his comic gifts kick in. He just can’t help himself:

KFC, McDonald’s, Burger King, Holiday Inn, Marriott Hotels and many more now global companies all base their business models on the idea that one size fits all. And Wal-Mart might soon teach us that the idea also applies to medical clinics, and someone might show it for hospitals as well.

Wal-Mart as an example of how “one-size fits all?” I know a lot of my liberal brethren would rather be caught dead than be seen inside a Wal-Mart, and there may not be any in the rarified environs of Princeton, New Jersey, but c’mon – are there no photographs in Princeton? Every Wal-Mart I’ve ever seen includes acre upon acre of variety.

And, in case someone doesn’t find anything to his liking in the Wal-Mart, there are thousands of other stores from Dollar General to Saks Fifth Avenue to choose from.

Now, my friend Uwe may prefer the old Soviet-style GUM Department stores for his retail needs, but is that really the model he wants to apply to health care? I can’t wait to hear the reaction once all the Princeton professorate is required to shop only at Wal-Mart.

Fortunately, right below Uwe’s letter is one from a Frank Zoz of Waterloo, Iowa, that is not nearly as funny, but might actually work –

I am absolutely convinced that health care costs will never be brought into control until people are spending their own money, or at least think they are. “RyanCare” changes to Medicare seem to be a step in that direction.

I think the ultimate solution is Health Savings Accounts (HSA) for everyone, with which they pay for insurance premiums and health care. The question is how these accounts are funded.

I am a John Deere retiree and on Medicare. John Deere provides insurance for its retirees. It provides money into an account (similiar to an HSA) from which we can pay for insurance and medical bills. My wife and I happen to have a Medicare Advantage plan and are very happy with it. The HSA covers our premiums and any significant additional costs. We have leftover funds that can be used for emergencies. If the government must be in health care, the best thing it could do is help fund HSAs for everyone.

House of Mirrors

By Greg Scandlen

So, you think the debate over ObamaCare was frustrating? You ain’t seen nothing yet.

Just as Massachusetts provided a preview of that debate, it is also debuting the coming argument over cost control. An article by Amy Goldstein in the Washington Post  tells us exactly how it will play out.  The internal contradictions are mind-boggling.

She begins by explaining that,

Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control.

Yes, “shove,” — kind of like Obama shoved us into his version of Wonderland.

She explains,

The governor’s proposal builds on a surprising consensus among leaders from the state’s insurance and hospital industries, medical society, legislature and governor’s staff who served on a special state commission assigned to diagnose the culprit behind the soaring medical spending. Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.

This, even though it is patently untrue.  Fee-for-service does not drive inflation in health care – or in any other sector of the economy. What drives inflation in health care is the one thing that makes it different from any other sector – third-party payment. Of course, all of those “consensus makers” benefit enormously from third-party payment, so they aren’t about to kill this golden-egg laying goose.

The article also disavows any responsibility the state may have for the unique cost increases in Massachusetts.  It says,

The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.

The state is saying, “Don’t blame us, it is the ‘rapid escalation in prices’ that is to blame, not the universal health program.” But why is Massachusetts having a “rapid escalation in prices” that no other state is seeing? Golly. It’s a mystery!

What to do, what to do? I know! We will pay doctors more for doing less!! INSPIRATION! Blue Cross has already begun —

The arrangement is a version of the accountable care organizations that the federal government also is trying to encourage in Medicare. They pay teams of doctors or hospitals a lump sum or what is called a “global budget” for the patients assigned to them. If a team can provide care for less, it keeps some of the savings, assuming it also meets enough of 64 measures of quality that Blue Cross has defined. Today, about one-third of the primary care doctors in Blue Cross’s network are taking part. A half-million HMO patients have been put in them — but not told by the insurer.

The article goes on to say the arrangement is “voluntary,” but voluntary for whom? Apparently not the half-million people who have “been put into them” and not told about it. Is this part of the “shoving” the Governor was so proud of?

Another part of the shoving were the arbitrary denials of insurance rate increases the Governor directed the insurance commissioner to make. The article reports the commissioner rejected 235 of 274 proposed rate increases last year.  Not because costs weren’t going up. The article already said they are. But for crass political reasons, dictated by the Governor who was up for re-election.  What a swell way to run a health care system!

But the article also contains the seed of what a real solution could be. Ms. Goldstein writes:

Attorney General Martha Coakley used new subpoena power to produce a report laying out large disparities in hospitals’ prices and concluding that they are unrelated to the quality of their care, the sickness of their patients or whether the institution is a teaching hospital.

Well, golly, again. If there is a wide variety of hospital prices unrelated to the quality of the care provided, is it possible – just possible – that consumers spending their own money might be able to shop around for the best deal and thereby punish those hospitals that overcharge and reward the ones that provide value?

And is it possible – just possible – that what gets in the way of that is not “fee-for-service” but third-party payment?

Can anyone say – YOU BETCHA!?

GAO Report Insults Consumers, Attacks Agents

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

Tel. 215-682-7075, rfs270@aol.com

“The great enemy of the truth is very often not the lie – deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought.” – John F. Kennedy (1917-1963)

A report published recently by the Federal Government Accountability Office (GAO-11-392-R) shows a massive lack of understanding about economic markets, insults consumers and attacks health insurance agents.  On page 24 of the report it states, “Currently, insurers typically pay agents and brokers to sell health insurance through commissions based on the price of the product sold.  This may motivate them to sell higher cost products or products that may not best meet the needs of individuals.”  Although the report lists “experts” who provided information for the report, after requesting it GAO could not document how they made such a ridiculous statement.

The statement insults the buying public since people do not simply accept the most expensive insurance if they have an alternative.  Any agent that operates in such a way will soon lose his or her clients and quickly go out of business.  I know an agent who had a client that claimed he was gouging her because her price for her insurance was $1.43 per month more than her neighbor’s premium.

There is a paternalistic assumption among those in government that Americans are incapable of shopping for insurance. Therefore the government needs to create a massive system of state exchanges to help us. State Legislators and Governors have now been thrust into the role of creating health insurance markets and new entities that don’t exist currently. All of this is in the name of reform.  Who will pay for the cost of implementation, staffing and housing these exchanges?  We will.

Further evidence of a poor job by GAO in their report is this strange footnote on Page 19.

“Employers may be reluctant to bring insurance agents into the workplace or to adequately compensate them, and appropriate compensation mechanisms need to be developed to ensure employees are steered into the most suitable plans rather than those that maximize revenue for the brokers.”

Does our government really understand how health insurance is sold, enrolled and serviced?  An agent who is not on site meeting with employees and taking care of their needs will not be in business very long.

Why would employers be reluctant to have their agent take care of this function?  Most of my small business owner clients don’t want to be in the position of taking care of the enrollments and explaining benefits.  They have their businesses to run.  They “hired” me to handle this for them.  I earn my commission, which is the revenue to run my business by performing these important tasks for them.

GAO has done many excellent and professional reports in the past.  This report on how people acquire insurance and suggested alternatives is not one of them.  The entire concept of exchanges is based on an insulting myth that we Americans can’t make our own decisions.  The exchanges will be an expensive, unnecessary and bureaucratic addition to all the other costs of Obamacare implementation.  We taxpayers have already paid $105 billion for the government’s administrative costs for the “reform.”  Where are the savings they promised us?